South Eastern Coalfields Ltd (SECL), the largest coal producing subsidiary of CIL, has received tepid response for its special forward coal auction held on 27 Feb’20, carried out specifically for the power producers.
The company had put forward an enormous volume in the sales which was envisaged as the third phase of the said auction in FY20. Incidentally, the total offered quantity of 5,700,000 MT in the current round of auction was nearly four times higher than that amassed in the previous two phases.
However, despite witnessing sale of 92% of the material put forward in the auction, it was a moderate turn-out in terms of price realization received for the sold quantity.
SECL had fetched an average bid price of INR 1098.44/MT, which was merely 2% higher than the assessed reserve price of INR 1081.61/MT. Detailed result of the auction can be seen here.
| Grade | Quantity | Price | |||
| Offered | Booked | Reserve | Bid | % Gain | |
| G8 | 150,000 | 72,000 | 1758 | 1758 | 0% |
| G9 | 100,000 | 48,000 | 1368 | 1368 | 0% |
| G11 | 4,200,000 | 3,852,000 | 1146 | 1192.03 | 4% |
| G14 | 350,000 | 348,000 | 898 | 898 | 0% |
| G15 | 900,000 | 900,000 | 708 | 708.22 | 0% |
| Total | 5,700,000 | 5,220,000 | 1081.61 | 1098.44 | 2% |
Source: CoalMint Research
Quantity in MT | Prices in INR/MT
Major take-away from the auction:
(a) In the absence of buyers which do not have their own power units, the auction had seen timid bidding, wherein approximately one-third of the sold quantity was procured at the base price.
(b) Out of the 5 offered grades, the high GCV coals (G8 and G9) had seen subdued demand which did not even manage booking of half of the quantity offered in the auction and were sold at their respective base price.
(c) Slight competition was spotted for G11 grade of coal, which had received most number of bids in the lot as well as a moderate premium over the reserved price.
(d) G11 coal offered from Dipka coal mine was sold in excess of INR 230-250/MT, while the same grade from Gevra mine received bids in range of INR 50-70/MT. Bids for remaining lot which fetched premium above the reserve price were noted in the range of INR 10-20/MT.
(e) Raipur Energen was the largest coal buyers in the auction, with intake of 972,000 MT. DB Power and Jindal power were among the other major coal receivers which had prominently booked lower coal grades to cater their plant’s operation.
The auction seen as an efficient measure for the power producers to focus on peak summer demand, had entitled buyers a three month validity of lifting against the successful quantity starting from Feb’20. Consequently, SECL has requested the power producers to submit the coal values for February, in order to initiate the dispatch for the month.
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